Justice, Opportunity and Shared Wealth for all South Australians

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GST increase will impact SA and low-income households most

New figures released by SACOSS today show that increasing or broadening the base of the GST would impact proportionately more on South Australian households than the rest of the country, and would impact on low income households in particular. 

The SACOSS figures, based on earlier modelling doen by the National Centre for Social and Economic modelling (NATSEM) at the University of Canberra, show that broadening the base of the GST to include fresh food, education, health, financial services and other commodities would increase GST for the average SA household by $36 per week.

Such a broader-based GST would result in a 42% increase in GST payments for low income households, while the highest income households would pay only 37% more. 

The impact of a broader-based GST on South Australian households would be about 0.3 percentage points higher than the rest of the country because fresh food, financial services adn other currently exempt commodities form a larger share of SA's household expenditure than the national average.

Alternatively, simply increasing the rate of the GST to 15% would add $48 per week in GST for the average South Australian household.

SACOSS Executive Director, Ross Womersley said, 
"We absolutely agree that we need a fair adn adequate tax regime to fund the vital services we want as a community, but the figures we released today show that there are real problems with simply relying on increasing and/or expanding the GST. 

"We tried tweaking what commodities the GST might apply to, but whatever changes we tried, it still impacted more on low income households.

"We also considered possible compensation, but there are problems with compensation packages. What is clear is the GST should not be seen as a simple panacea for addressing revenue issues and therefore debate about tax reform should definitely not be limited to the GST.

"We need a healthy tax debate that explores other reform measures including land taxes, superannuation tax breaks, capital gains tax, negative gearing, wealth and "sin" taxes, and other areas of taxation".

The question of what services we as a community require of our governments and how we fund those vital services is crucial to how our state, society and country function.

If we want a fair society where everyone is included and has access to good services, we need a fair and sustainable tax base. 

For this to be the case, the people who have the most ability to pay taxes should pay the most. 

Download the SACOSS GST Fact Sheet.

Published Date: 
Thursday, 23 July 2015